I did get a subscription refund though.

After a bad January, I was making about a thousand a month trading options. IIRC I had a run of making money or breaking even on about twenty or more trades.

Then came mid October. Something didn’t feel right, and told my girlfriend that I was living with (now wife) that I was going to sit on the sideline for a couple weeks. Sure enough, less than a week later came Black Monday.

She came home from working the night shift at the hospital on the morning of Black Monday, and I was in front of the TV basically crying that I had not followed my instincts and bought puts. She said since you were right before, why not follow your instincts now? So I called the brokers I knew in New York for Fidelity about an hour before closing, and told them to buy every thing up to the balance in my account. It took a couple days to even figure out what I owned.

Eventually I was told they only got half of what I wanted. The bounce I expected happened, but it was mostly built into the options I had bought. Unfortunately I broke my golden rule of not holding over weekends.

Mainly, I remember watching the financial network late Sunday night (a week after Black Monday), and all the int’l markets opening way down. Didn’t even bother to get up Monday morning other than to see Black Monday II, and know I was basically wiped out.

Dusted off the resume, and went back to working for the man.

Before I became a broker, I had been in the media business and had a good contact at the Washington Post. A week before the crash, I had been called and asked about the market. I responded the way senior brokers in my office had advised me. To paraphase…”I don’t know what’s going to happen, but it might make some sense to take some profits and raise some cash.”

I didn’t issue a “sell call.” I only advised caution and prudence. My manager took one look at the Wash. Post and told me never to speak to the press without clearing it with him. (I have the article framed in my office as a constant reminder.)

What I recall most about the days after the crash was just how bad things were. Much worse back then anything that’s occured since. There were rumors about major firms being bankrupt. There were squawk box driven attempts to mobilize brokers to coordinate buys. As a retail broker we had to quickly respond to margin calls. I had a number of substantial clients who took money from my accounts for margin calls at other brokerage houses.

Shortly after the crash, every broker in my branch was called into the manager’s office for a meeting. We were all asked what we were going to do to help him get through what everyone thought would be an impossible year. Younger brokers like myself were advised to consider career alternatives. I was specifically asked what I was going to do to help lower overhead in the branch.

I recall my response. I said…”If I had to make 100 phone calls to generate interest in stocks, how many phone calls is it going to take now? My costs are going up, not down.”

I delieved this assessment to a grim faced industry veteran who is still managing today. My conclusion was to escape to another firm with deeper pockets, but how was I going to get there with a blown book?

For those of us in the business at that time, do you remember how we survived?

Closed end bond funds. We had a new closed end bond fund every month. That was how we survived. (At least that’s how I survived.)

Wall Street gave us one fund after another. Each month a little different. We always pounded people on the deals. We built positions in exchange traded bond funds like they were GM or GE.

There wasn’t much product in those days. No serious broker made a career on mutual funds. We were mostly stock jockeys. We needed the ability to build positions in those bond funds, margin them, and later trade them a little. We counted on the extra commissions associated with new issues. We also prayed that the firms would not let the bond fund shares drop due to commissions we had been paid on the offering.

Our smarter clients wondered whether it made more sense to buy these bond funds in the aftermarket. It was desperation that pounded these people into the deals.

Aftermarket? We’d only make regular commission on an aftermarket trade; not the juice of a new issue.

That’s my lasting impression of the crash. Closed end bonds funds kept most of us in the game.

And yes, we did have quote machines back then, not tickers.

best to all

I remember saying, “but Dad they won’t let the market crash. They won’t let another Great Depression happen.”

He turned to me and in one of the few times I ever saw my father scared in his life (not even the day he died), he said “It did crash and its worse than the Great Depression”

Honestly, that was probably the moment the conspiracy theory instinct inside me died and I realized that no entity was even capable of pulling the strings on the whole economy.

It would have cost him very little to tell her of the crash, and the way I heard it, she lost thousands that day.

I started investing in 1978. What the crash of 1987 taught me was that there are times when mere survival becomes an accomplishment. I’ve had two of them, and they will haunt you for the remainder of your investment life.

You will mutter “with the grace of God go I” and it won’t have any religious connotation at all, it will simply convey your astonishment.

I was eleven on Black Monday…at the time my rather strict parents didn’t allow us to watch “Mainstream TV” (excepting on Saturdays) – we were a PBS/NPR household.

I finished watching “The Electric Company” and was settling in for my evening routine, which involved hanging out with my Step-father in his study, watching the McNeil-Lehrer Newshour and then the nightly business report.

They were all abuzz about the crash.

I had read about the crash of 1929, so I thought it was a repeat of that same situation and was worried about the family having to stand in bread lines….a concern my step-father quickly disabused.

“No Markham it’s not that bad, this is a short-term thing”

“Oh”

Still, he did explain the stock market to me that day, I showed a lot of interest so he got me a subscription to the WSJ.

Hmm, this story should have a point……..